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Survive a stock market dip

Any dip in the market can set people on edge. Feelings of uncertainty and worry are only natural: We see the numbers in our retirement accounts go down and we want to stop the bleeding any way we can. Of course, being able to check balances any time of day or night 鈥� and watching those numbers plunge in real time 鈥� doesn鈥檛 help fight the urge to react immediately.

If you鈥檙e feeling on edge during a market tumble, whether retirement is just around the corner or years from now, here are some helpful tips to keep in mind to help navigate market volatility with more confidence

Don鈥檛 sell

Panic selling stocks may be your first initial urge, but it is never a smart move. In fact, when the market is down, it鈥檚 the worst time to pull your money out.

The key to protecting yourself against this kind of reaction is to have a portfolio that matches your financial situation and goals for the future, including factors like your expected retirement age and your tolerance for risks. If your portfolio is too risky for what your gut can bear 鈥� whether because of your proximity to retirement or not 鈥� meeting with a financial professional can help you adjust your accounts to better match your risk to what you can tolerate.

Look ahead 鈥� far ahead

Don鈥檛 just focus on your balance right now. If retirement is not around the corner (meaning less than five years away), you shouldn鈥檛 fear the short-term changes of the market.

Over the long run, stocks increase in value, but that doesn鈥檛 mean there won鈥檛 be periods where they will decline. Instead of panicking, view these dips as buying opportunities that allow you to buy stocks at essentially a 鈥渟ale鈥� price. And if you鈥檙e putting money into your account evenly throughout the year, that means you鈥檙e bargain shopping when prices dip.

Reallocate your funds

If you鈥檙e not far off from retirement and want to make sure you don鈥檛 get socked on a dip right before you鈥檙e about to start your next chapter, it鈥檚 time to talk to a financial professional about reducing your risk.

If you are close to retirement, it鈥檚 important to be much more risk averse and have a more conservative asset allocation. That may mean taking some of your funds and buying an income annuity to assure a monthly cash flow during retirement. Another option is a longevity annuity, which provides you with an annual income at a certain age like 80 or 85, which can protect you from outliving your retirement funds.

Remaining calm during a market drop is difficult, but essential to staying on track for the future, whether retirement is close by or still several years away. Meeting with your financial professional can help you better understand changes in the market and how to weather a stock market plunge with more confidence.

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麻豆传媒 and its employees are not authorized to provide tax, legal, or investment advice. Please contact a qualified professional for such advice.